Mail Stop 0510
February 15, 2005
via U.S. mail and facsimile
Mr. Seth L. Van Voorhees
Vice President, Treasurer, Chief Financial
Officer and Secretary, American Pacific Corporation
3770 Howard Hughes Parkway, Suite 300
Las Vegas, Nevada 89109
RE: Form 10-K for the fiscal year ended September 30, 2004
and
Form 10-Q for the period ended December 31,
2004
File No. 1-8137
Dear Mr. Van Voorhees:
We have reviewed these filings and have the following
comments.
If you disagree with a comment, we will consider your explanation
as
to why our comment is inapplicable or a revision is unnecessary.
Please be as detailed as necessary in your explanation. In some
of
our comments, we may ask you to provide us with supplemental
information so we may better understand your disclosure. After
reviewing this information, we may or may not raise additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
FORM 10-K FOR THE YEAR ENDED SEPTEMBER 30, 2004
Comment applicable to your overall filing
1. Where a comment below requests additional disclosures or other
revisions to be made, please show us in your supplemental response
what the revisions will look like. These revisions should be
included in your future filings.
Item 6. Selected Financial Data, page 20
2. Please revise your disclosure to include dividends declared per
common share as required by Instruction 2 to Item 301 of
Regulation
S-K.
Results of Operations, page 24
3. Please revise your discussion to explain the causes of the
significant increase in the receivables collection period in 2004
compared to 2003, including an explanation of whether this may be
indicative of receivables collection problems.
Summarized Quarterly Financial Data, page 31
4. Please revise your disclosure to include income (loss) before
extraordinary items and cumulative effect of a change in
accounting
and per share data based upon such income (loss) as required by
Item
302(a)(1) of Regulation S-K.
Financial Statements
5. It is unclear whether you have provided the information
required
by Rule 5-04 of Regulation S-X to be included in Schedule II.
Please
advise or revise.
Statements of Operations, page 41
6. Please revise the net interest and other expense (income) line
item to present interest income, interest expense and other
expense
(income) as separate line items. Net presentation is not
appropriate. Please also disclose in a footnote in table format
the
components and related amounts included in the revised other
expense
(income) line item for each period your statement of operations is
presented, including interim periods. See Rules 5-03.7 to .9 of
Regulation S-X. In addition, please separately disclose the
amounts
of interest income and preferred stock dividends received from
your
ES joint venture for the six-months ended March 31, 2004 and each
of
the years ended September 30, 2003 and 2002. Please also disclose
the statement of operations line item that each of these amounts
was
included in prior to ES being consolidated by you on March 31,
2004.
7. Please provide us with your significance computations under
Rule
3-09 of Regulation S-X for the ES joint venture for each period
presented. Please also tell us for the six months ended March 31,
2004 and each of the years ended September 30, 2003 and 2002 the
following:
a. ES joint venture`s pre-tax income,
b. its total preferred stock dividends and
c. the portion that were yours.
8. Please also tell us how you treated these preferred stock
dividends made by ES in your numerator and denominator for each
period presented.
Note 1 - Summary of Significant Accounting Policies, page 44
9. Please disclose the types of expenses that you include in the
cost
of sales line item and the types of expenses that you include in
the
operating expenses line item. Please also disclose whether you
include inbound freight charges, purchasing and receiving costs,
inspection costs, warehousing costs, internal transfer costs, and
the
other costs of your distribution network in the cost of sales line
item. With the exception of warehousing costs, if you currently
exclude a portion of these costs from cost of sales, please
disclose:
a. in a footnote the line items that these excluded costs are
included in and the amounts included in each line item for each
period presented, and
b. in MD&A that your gross margins may not be comparable to those
of
other entities, since some entities include all of the costs
related
to their distribution network in cost of sales and others like you
exclude a portion of them from gross margin, including them
instead
in a line item, such as operating expenses.
10. Please disclose your accounting policy for shipping and
handling
costs. In doing so, disclose both the line item in which you
include
amounts paid by customers to you for shipping and handling and the
line item(s) in which you include your actual costs for shipping
and
handling. If you do not include all of your actual costs for
shipping and handling in cost of sales, also disclose the amounts
of
your actual costs for shipping and handling excluded from cost of
sales for each period presented as required by paragraph 6 of EITF
00-10.
Sales and Revenue Recognition, page 44
11. Please provide us with additional information to help us
understand the appropriateness of your recognition of revenue
related
to "bill and hold" transactions. In your response, please
specifically address each of the seven conditions and five
considerations discussed in SAB Topic 13:A(3)(a) - Bill and hold
arrangements. Please also disclose the revenues recorded related
to
bill and hold sales for each period presented.
Recently Issued Accounting Standards, page 47
12. Please provide us with additional information regarding the
anticipated effect of adopting SFAS 151.
Note 3 - Property, Plant and Equipment, page 48
13. Please breakout the buildings, machinery and equipment line
item
into smaller components. At a minimum, please present buildings
separately from machinery and equipment.
Note 6 - Acquisition, page 49
14. Please revise your discussion to describe here or under the
intangible assets heading on page 45 the "certain intangible
assets"
acquired from Kerr-McGee, including the amounts assigned to any
major
intangible asset class. Refer to paragraph 44(a)(1) of SFAS 142.
15. Please provide us with additional information to help us
understand your conclusion regarding the significance of the ARC
acquisition under Rule 3-05 of Regulation S-X.
Note 7 - Income Taxes, page 50
16. Please revise your discussion in this note and in MD&A to
provide
additional information regarding the factors leading to your $2.1
million change in estimate of deferred income taxes during fiscal
2004.
Note 8 - Employee Benefit Plans, page 50
17. Please disclose the information described in the asterisked
portions of paragraph 5 of SFAS 132(R) regarding your pensions and
other post-retirement benefits.
18. Please tell us why you have disclosed an expected return on
plan
assets of 8% for the supplemental executive retirement plan when
this
plan appears to have no assets.
Note 9 - Commitments and Contingencies, page 52
19. Please revise your disclosure to clarify whether you expect
the
lawsuits in which you are involved to have a material effect on
your
cash flows.
20. It is unclear why the cost of the in situ remediation method
to a
reference dose of 1 ppb is not a reasonably possible additional
loss.
In addition, it is also unclear why the cost of the in situ method
to
a reference dose of 24 ppb is not the low end of the range of
probable additional loss. Please supplementally tell us the cost
of
the in situ method to each of these references doses. Further,
please provide us with additional information to help us
understand
why you believe neither the low end of the range of probable
losses
nor reasonably possible additional losses are estimable.
Note 11 - Segment Information, page 55
21. Please provide us with additional information regarding your
operating segments and their aggregation into specialty chemicals
and
other businesses. In your response, please describe how the
aggregated operating segments, including the ES joint venture,
satisfy each of the criteria discussed in paragraph 17 of SFAS
131.
Please also address your fiscal 2005 segments.
22. Revise your disclosure to provide the product line disclosure
required by paragraph 37 of SFAS 131.
* * * *
Please respond to these comments within 10 business days, or
tell us when you will provide us with a response. Please provide
us
with a supplemental response letter that keys your responses to
our
comments and provides any requested supplemental information.
Detailed letters greatly facilitate our review. Please file your
supplemental response on EDGAR as a correspondence file. Please
understand that we may have additional comments after reviewing
your
responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in their filings;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
If you have any questions regarding these comments, please
direct them to Scott Watkinson, Staff Accountant, at (202) 942-
2926
or to the undersigned, at (202) 942-1774.
Sincerely,
Rufus Decker
Branch Chief
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Mr. Seth L. Van Voorhees
February 15, 2005
Page 1 of 6
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0510
DIVISION OF
CORPORATION FINANCE